published Thursday, July 21st, 2011

More questions for Tennessee Multicultural Chamber

by Cliff Hightower
David Johnson, president of the Chattanooga Neighborhood Enterprise and Chattanooga Community Development Financial Institution.
David Johnson, president of the Chattanooga Neighborhood Enterprise and Chattanooga Community Development Financial Institution.
Photo by Jenna Walker.
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David Johnson, president of Chattanooga Neighborhood Enterprise and Chattanooga Community Development Financial Institution, said Wednesday a $574,000 loan made to the Tennessee Multicultural Chamber of Commerce was to be used for three purposes:

$500,000: To buy land

$44,000: To pay interest on debt

$30,000: To pay for demolition on land

  • photo
    Sherrie Gilchrist is the executive director of the Tennessee Multicultural Chamber of Commerce.
    Photo by Tim Barber /Chattanooga Times Free Press.

The U.S. Department of Housing and Urban Development on Wednesday demanded the Tennessee Multicultural Chamber of Commerce say how and where the agency spent $545,000 in federal dollars on a Business Solutions Center that's never been built.

And the holder of a separate $574,000 loan to the minority chamber said a decision could be made within days whether to foreclose on two of the chamber's five properties on M.L. King Boulevard.

HUD spokesman Joe Phillips said the department is seeking documentation such as bills and invoices spelling out how the chamber spent the $545,000 grant it received in 2005 and 2006.

He said the Multicultural Chamber has 15 days to respond when it receives HUD's letter of inquiry. He referred all other questions to the HUD Office of Inspector General, where a spokesman Wednesday said the office had no immediate comment.

David Johnson, president of Chattanooga Neighborhood Enterprise and Chattanooga Community Development Financial Institution, said the FBI has asked him about the $574,000 loan the financial institution made to the chamber in 2008 to help develop the business center.

"I asked if the CDFI or staff was the target of an investigation," Johnson said. "The answer was no."

He said the FBI asked about Multicultural Chamber Executive Director Sherrie Gilchrist's involvement at a September board meeting where the loan was approved. Gilchrist serves on the CCDFI board.

"They asked about her presence," he said.

He said the meeting's minutes reflect that she recused herself from the vote and left the meeting. The minutes also state that she made comments but not what those comments were.

Johnson said the financial institution's board could act "within the next few days" on the properties along M.L. King Boulevard. He said the chamber is past due 60 days on one note and 90 days on another.

"The option of foreclosure is always there," he said.

Gilchrist and Multicultural Chamber board member John Taylor did not return phone calls seeking comment.

The Tennessee Multicultural Chamber of Commerce became the target of FBI and HUD probes after a city review last week detailed possible financial mismanagement, questionable loans and land deals and extravagant salaries and travel expenses. The review was triggered by a Times Free Press investigation showing inconsistencies in the chamber's budget requests to Chattanooga and Hamilton County.

The Multicultural Chamber provided responses to 18 questions posed by the city review to the City Council on Tuesday and the County Commission on Wednesday.

At Wednesday's commission meeting, Taylor and Gilchrist told commissioners they were there not to ask for money but to restore the integrity of the organization.

Gilchrist told commissioners the group never used taxpayer money inappropriately.

"We have been really diligent to make sure the taxpayers' money is used the way it's supposed to be," she said. "We don't have anything to hide."

Taylor told commissioners the report on the city's review should have included talks with Gilchrist and board members.

"It was a report done in a vacuum," he said.

Questions linger around the loan and grant for the Business Solutions Center, slated to be built on M.L. King Boulevard. Five properties were bought for the proposed center.

Gilchrist told commissioners Wednesday that space in the center was to one day house both the Multicultural Chamber's offices and be rented out to small businesses.

Another aspect of the Business Solution Center deal was a possible land swap with the University of Tennessee at Chattanooga. The Multicultural Chamber said it hoped to swap property at the corner of Douglas and M.L. King Boulevard for UTC property at Maple Street and M.L. King.

"The University of Tennessee was in agreement," Multicultural Chamber officials said in their response to the city review.

UTC spokesman Chuck Cantrell said Wednesday the university showed some interest but has not made a decision about the swap.

"We never got to the actual decision-making process," he said.

Johnson speaks about loans to Multicultural Center
David Johnson, president of the Chattanooga Community Development Financial Institution, spoke during a news conference Wednesday about a loan the CCDFI made to the Tennessee Multicultural Chamber of Commerce and about his involvement in an ongoing FBI investigation of the TMCC.
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01centare said...

all that conspired to use public tax dollars to purchase or develop land valued at $46,000 for $200,000

All of the properties in the inner-cities have been overpriced in order to make way for the gentrification and sway people from the suburbs to return. Oops! We're not suppose to use the G word. We're suppose to openly say revitalization, and only use the G word behind closed doors. 300K condos have been built on Main Street with our tax dollars. They've slowly but surely pushed most of the poor from many areas with over priced property, which increased their property taxes. Wasn't that the plan all along? Get the poor out. Up the property value? Bring higher income in to the inner-city=Higher Property Taxes=more revenue for the city?

July 21, 2011 at 4:38 a.m.
328Kwebsite said...

How do we know that the money was spent? The tone of the article seems to assume that the money is gone. Do you know if the money was spent?

By the text and the facts presented here, the $500,000 could still be sitting, unused, in their bank accounts, which is not a crime.

If you want to call the FBI on somebody Cliff, you should direct them towards a $328,000 website payoff with $60,000 of federal funds that's an obvious violation of federal contracting laws by being a no-bid sole source "gift" for a common service.

July 21, 2011 at 7:50 a.m.
328Kwebsite said...

If she's been really diligent to ensure the money was used the way it was supposed to, and they haven't built that building, then that means that somewhere the difference is sitting in a bank account, waiting to be used.

If it is there, then you've lost a significant amount of intellectual credibility for persecuting someone who may have done nothing wrong.

Your entire story is a gamble that someone is being corrupt when, in fact, you don't know what happened. You have yet to show anyone that the money is gone.

Good luck. Next time, write stories based on observable facts.

If you want an observable fact, that $328,000 website deal involves the misappropriation of $60,000 in federal funds. It didn't have to be that way, but that is what we all saw happen.

If the Multicultural Chamber still has the money you say is missing, then what?

Prove to us that you know the money is gone. You can't. Tracking requests for more income and listing past purchases is not an indicator that a grant was used.

I have seen people keep over $250,000 in cash grants on hand, unused for months, because they couldn't meet the requirements to spend the money. It's entirely possible that the half million is sitting in a bank account. At least its difference should be there; money spent against money still on hand.

Yes, people can keep hundreds of thousands in cash, on hand, because they are being careful about spending tax dollars. I know I've seen it done.

Meanwhile, I've also seen many, many people spend and then get forced to return, Federal grants for $5000 or less. It's common for there to be audits after spending; those people had to return the money after they violated the spending plan guidelines.

Between the two kinds of stories, it's right now looking like your entire set of articles on the Multicultural Chamber can't prove the basic concept that the money was spent incorrectly.

How do you know where the money is?

July 21, 2011 at 8:20 a.m.
adolphochs said...

The African American Chamber of Commerce was a bad idea and changing the name didn't improve it. It certainly didn't serve a broader community and apparently wasn't effective in its mission. It's only the last chapter in a string of iniatives by a noisy few in the minority community who have created organizations whose only result is to provide above market salaries for a few insiders. Fortunately for them the suspected waste, fraud and abuse during the development of the Bessie Smith Hall was never investigated.

July 21, 2011 at 9:39 a.m.
eastridge8 said...

Yeah, adolphochs...I was wondering when someone else would bring up the Bessie Smith Hall deal...I mentioned it on one of the other comments section not too long ago...They never learn...and by "they" I mean the mayors office, the other chambers, the DA's office (who should have been looking into that for fraud/misappropriation of funds).

BUT I guess if that had all been done we would be hearing screams of RACISM!!!


And for the SAME reason Bessie Smith was never investigated Sherrie Gilcrist will NEVER be investigated...I repeat NEVER!

July 21, 2011 at 10:35 a.m.
zulalily said...

This goes way beyond the scope of "racism"! If the money IS setting in a bank account somewhere, then wouldn't Ms. Gilchrist be anxious to say so? Chances are it has been stolen and surely these people will be held accountable!

July 21, 2011 at 10:59 a.m.
johnnyhurst said...

328kwebsite. If she still had that money dont you think shed have said so by now? your just grasping at straws trying to argue that maybe its in the bank somewhere. Its gone and somebody had better be ecpecktin to be indicted.

July 21, 2011 at 2 p.m.
harrystatel said...

"somebody had better be expecting to be indicted"

or become mayor, city attorney, city councilman, EAC director, DA, judge . . .

July 21, 2011 at 2:32 p.m.
johnnyhurst said...

Well youve gotta be in the good ol boy club in order to hope for that, and Gilchrist dont look like a good ol boy to me.

July 21, 2011 at 3:18 p.m.
chet123 said...


July 21, 2011 at 6 p.m.
fairmon said...

The broader question and investigation may be of the grant process that allows events like this to occur. Multiply this event by thousands. You can bet this is not an isolated incident when the same process and often with a lot more money involved goes on in most cities across the country. The city was guilty of similar behavior with state and federal grants for storm water run off which led to Littlefield's panic and the huge tax increase called a fee.

The city council keeps committing tax payers to future cost by seeking and receiving federal grants. The defense for seeking a grant to add police personnel which are certainly needed was we can "find" the money by the time the city has to assume the cost. Find it now without the grant and add the needed personnel.

July 25, 2011 at 7:31 a.m.
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